On September 18, 2015, the Court of Appeals for the Federal
Circuit, sittingen banc, ruled (6-5) inSCA Hygiene Products AB et al. v.
First Quality Baby Products LLC et al., that laches remains a
viable defense in a patent infringement suit, even after the Supreme Court’s
2014 “Raging Bull” decision (Petrella
v. Metro-Goldwyn-Mayer, Inc.), which held that laches does not
apply to copyright cases.

Codified laches defense may bar legal remedies

The first question inSCA Hygiene Productswas a simple one — does thePetrellacase apply to patent infringement, or
can laches be used as an equitable defense, even in cases of continued patent
infringement?

The majority held that Congress codified a laches defense in 35
U.S.C. § 282(b)(1), and this defense may bar legal remedies. Accordingly, the
court found that it had no judicial authority to question the law’s
propriety.

According to the decision, whether Congress considered the
quandary inPetrellaisirrelevant. In the
1952 Patent Act, Congress settled that laches and a time limitation on the
recovery of damages can coexist in patent law.

The majority opinion of the court found that it must respect that
statutory law.

Can laches bar permanent injunctive relief?

The second question foren bancreview concerns the extent to which
laches can limit recovery of ongoing relief from continued infringement.

The majority noted that equitable principles apply whenever an
accused infringer seeks to use laches to bar ongoing relief. Specifically, as
to injunctions, consideration of laches fits naturally within the framework ineBay
Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), which clarified
that a patentee is not automatically entitled to an injunction, but must prove
that the equities favor an injunction.

There are two parts to this inquiry: (1) whether laches can bar
permanent injunctive relief and (2) whether it can bar an ongoing royalty for
continuing infringing acts.

When a court orders ongoing relief, the court acts within its
equitable discretion. SeeeBay, 547 U.S. at 391–92.
As eBay instructs, equitable “discretion must be exercised consistent with
traditional principles of equity, in patent disputes no less than in other
cases governed by such standards.”eBay,
547 U.S. at 394.

With respect to injunctions, this means followingeBay’sfamiliar four-factor test: A plaintiff
must demonstrate: (1) that it has suffered an irreparable injury; (2) that
remedies available at law, such as monetary damages, are inadequate to
compensate for that injury; (3) that, considering the balance of hardships
between the plaintiff and defendant, a remedy in equity is warranted; and (4)
that the public interest would not be disserved by a permanent
injunction.

Consideration of laches fits naturally into this framework. As
noted inPetrella, “the District
Court, in determining appropriate injunctive relief . . . may take account of
[the plaintiff’s] delay in commencing suit.”Petrella, 134 S. Ct. at
1978; see alsoMenendez, 128 U.S. at 523
(“Mere delay or acquiescence cannot defeat the remedy by injunction in support
of the legal right, unless it has been continued so long, and under such
circumstances, as to defeat the right itself.”).

Many of the facts relevant to laches, such as the accused
infringer’s reliance on the patentee’s delay, fall under the balance of the
hardships factor.Id. Unreasonable delay in
bringing suit may also be relevant to a patentee’s claim that continued
infringement will cause it irreparable injury. More than anything, district
courts should consider all material facts, including those giving rise to
laches, in exercising its discretion undereBayto grant or deny an injunction. SeeeBay,
547 U.S. at 394.

In sum, courts must recognize “the distinction between . . .
estoppel and laches . . . .”Id. (first alteration in
original). Whereas estoppel bars the entire suit, laches does not. As outlined
above, laches in combination with theeBayfactors may in some circumstances
counsel against an injunction. However, a patentee guilty of laches typically
does not surrender its right to an ongoing royalty. Paramount to both of these
inquiries is the flexible rules of equity and, as a corollary, district court
discretion.

Takeaways of the decision

For the foregoing reasons, laches remains a defense to legal
relief in a patent infringement suit afterPetrella.

Nothing changes in patent litigation based on this decision.
However, this case may be ripe for review by the Supreme Court, as the justices
may decide the “Raging Bull” decision should apply to patent litigation.

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